- Unreported Judgment
SUPREME COURT OF QUEENSLAND
Qikloan Pty Ltd v Babapen Pty Ltd  QSC 44
QIKLOAN PTY LTD
BS3549 of 2007
24 March 2010
1 - 4 February 2010
A Lyons J
The Plaintiff’s claim is dismissed
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – OFFER AND ACCEPTANCE – MATTERS NOT GIVING RISE TO BINDING CONTRACTS – VAGUENESS AND UNCERTAINTY – AMBIGUITY – where $100 000 was transferred from a company to another company – whether this money was transferred under a short term loan agreement at seven percent monthly interest – or whether this money was a contribution to a composite loan from both companies to a third party
The plaintiff appeared as agent/director
L Bowden for the defendant
The plaintiff appeared as agent/director
Provestlaw for the defendant
A LYONS J:
- Milne Jurisich and Gordon Baxter who both reside on the Gold Coast, are directors of companies that provide short term loans at high interest rates. Mr Jurisich is director of Qikloan Pty Ltd (the plaintiff) and Mr Baxter is director of Babapen Pty Ltd (the defendant). This dispute relates to an alleged short term loan at high interest rates between the two companies.
- The plaintiff contends that during a phone call on 3 January 2006 there was an agreement between himself and Baxter, as sole directors of their two companies, whereby Baxter borrowed $100,000 at an interest rate of seven per cent per month payable in advance. The term of the loan was for one month with a maximum term of three months. Jurisich contends that neither the loan amount nor any interest has been paid in the past four years.
- The plaintiff claims that, as at 4 February 2010, an amount of $3,151,908.68 inclusive of compound interest was due and owing under the agreement
- Jurisich and Baxter have completely different versions of events. The resolution of this dispute ultimately depends on whose version of events I accept.
Mr Baxter’s version of events
- Baxter agrees that Qikloan forwarded an amount of $100,000 to him on 3 January 2006. He states, however, that this was Qikloan’s contribution to a composite loan which Qikloan and Babapen were making to a purchaser called Suarez, who needed short term finance to settle a contract of sale because his pre approved loan from the Commonwealth Bank would not be available for a couple of weeks.
- Baxter denies that there was a phone call, as alleged by Jurisich, on 3 January or that he asked Jurisich for a loan in the terms alleged. He also denies any agreement whereby money was to be lent to him by Jurisich or his company Qikloan. He denies that there are any amounts owing by him or his company Babapen to Jurisich or Qikloan pursuant to an agreement, as contended.
- The critical issue therefore, is whether I accept that there was an oral agreement, as alleged by Jurisich. This requires a detailed examination of the phone call on 3 January 2006, the relationship between the parties, the loan agreement with Suarez and the documentation prepared in support of the loan. In particular, it will be necessary to analyse what evidence there is to substantiate the two versions of events.
The phone call – Mr Jurisich’s version
- The essence of Jurisich’s claim is that, on 3 January 2006, he was in Victoria visiting his mother when “around mid morning” he received a phone call from a man called Joachim Pydde. It would seem clear from the evidence that Pydde had a long involvement with short term loans on the Gold Coast and had been involved in loan transactions involving both companies previously. In his evidence at the trial, Jurisich stated that during that call Pydde asked him “if any of my companies had money to lend at that time?” Jurisich replied:
“‘Yes, Qikloan does,’ and I asked him, ‘Why?’ and he said, ‘Gordon needs to borrow a hundred thousand dollars on a short-term basis because he's settling a deal today’ ... I said to Joachim Pydde, ‘Don't be silly,’ I said, ‘Gordon doesn’t need any of my money, he’s multi-millionaire in his own right.’ And he said, ‘No, no, no,’ he said, ‘he’s made a lot of loans and he needs a hundred thousand dollars on a short-term basis for a month, maximum up to three months.’ I said, ‘Okay.’ I said, ‘Where’s Gordon now?’ And he said, ‘Sitting right beside me,’ and I said, ‘Where's that?’ He said, ‘At Gordon’s house’----- ‘We're at Gordon’s house.’ I said, ‘And where’s Gordon?’ He said, ‘He’s right here beside me.’ I said, ‘Let me talk to him.’ So I got Gordon on the phone and I said, ‘Did you hear what Joachim just said?’ He said, ‘Yeah,’ he said, ‘he’s here’. I said, ‘Okay,’ and I said, ‘Is that true? Is it correct?’ He said, ‘Yes.’ ‘And so you need the money for a month up to three?’ He said, ‘Correct.’ Pydde had already told me that they were getting 7 per cent on the money-----”
- At that point Jurisich says that when he asked who he should send the money to Baxter said to send it to him and that Baxter had then provided him with the BSB number and his bank account details to which the funds were to be transferred. Jurisich says that Baxter emphasised to him that cleared funds were required that day. Jurisich says that at “around 10.15am” he went to the Commonwealth Bank at Myrtleford and drew a bank cheque for $100,000. He states he then walked down the street to the ANZ Bank and explained what he required and that the bank “agreed to help, and because it’s a small country town the bankers all know each other there I was able to have that cheque express cleared there and then.”
- Jurisich says that it was only because of his knowledge of Baxter’s strong financial standing that he agreed to transfer the funds into his nominated bank account. Jurisich says that at no time during the conversations was he told the reason for the loan, the name of the purchaser or any details of the security for the loan. He also states that there was no suggestion that the funds were to become part of a composite loan.
- There is clear evidence that on 3 January 2006 Jurisich withdrew $100,000 from his bank account at the Commonwealth Bank and that that amount was deposited via internet banking to the account of Babapen Pty Ltd on the same date. The critical issue, however, is whether the money was a loan to Baxter, as alleged.
- Jurisich’s claim is clearly based on the oral agreement which he says was reached between the parties on 3 January 2006 during the course of the telephone conversation. Accordingly, that telephone conversation and the details of that conversation, as well as the circumstances surrounding it, need to be closely examined.
- The necessary starting point is to examine the agreement as pleaded by the plaintiff. In his Reply, the plaintiff refers to the two conversations as set out above. That is, there is a reference to an initial conversation with Pydde on 3 January and then a conversation with Baxter. When particulars were sought, Jurisich stated that the first conversation with Pydde occurred during a call at approximately 10.00 am “in response to a call from Pydde to call”. In relation to the second conversation, the particulars state that that conversation with Baxter occurred by telephone at a time “shortly after 10 am after speaking with Pydde”.
- There are a number of telephone records in evidence. Those telephone records confirm that on 3 January 2006 there were several short calls from Jurisich to Pydde between 8.30 am and 10.03 am and one call from Jurisich to Baxter at 10.17 am, which lasted two minutes. Accordingly, those records confirm that Jurisich rang Pydde at around 10.00 am and that a short time later he rang Baxter. There were clearly calls between the parties on 3 January.
- The critical issue is whether the conversation, as alleged by Jurisich, occurred. A crucial part of that conversation, as set out by Jurisich above, is that Pydde and Baxter were together at Baxter’s home on 3 January when the discussion occurred about Baxter’s need for a short term loan. The telephone records do not support this assertion.
- Baxter’s car phone records indicate that Baxter was making a phone call from his car phone in the Beenleigh area at 9.56 am on 3 January 2006. The mobile phone records indicate that at 10.09am at Coomera Baxter made a call to Pydde. Baxter’s mobile phone records do not reveal any calls to Jurisich in the period 24 December 2005 to 4 January 2006 and his car phone records reveal one phone call to Jurisich at 10.49 am on 4 January 2006.
- Baxter’s evidence in relation to this phone call is as follows:
“What do you say about the proposition that you and Mr Pydde were located at the same place at some stage during that morning?-- Sorry, could you repeat that?
Well, that you were together and Mr Pydde made a phone call to Mr Jurisich?-- Quite obviously we were not at the same place. Joachim was not with me, I was in the car. You can see by my phone records I was talking to Joachim at the time I was supposedly sitting next to Yoachim (sic) Pydde.
And for that you rely upon the phone calls from your own phone to Pydde shortly before the phone call in question?-- Well, yes. Yoachim (sic) Pydde was not with me that day.
Leaving aside this conversation, have you ever agreed to borrow money from Qikloan?-- No.
At 7 per cent, or per month, or at any other rate?-- No.”
- On my analysis of the phone records, those records do not support Pydde and Baxter being together at Baxter’s home at Hope Island making a call to Jurisich mid morning on 3 January 2006 or of them being together when Jurisich called Baxter at 10.17 am for two minutes.
- Neither in my view, do the phone records support Jurisich’s version of a conversation on 3 January in the terms alleged.
- In terms of that conversation, I consider that Baxter’s version of events is more plausible. His version is as follows:
“… Well, I do remember speaking to Milne Jurisich that day, yes.
Would you accept that it was 10.17?-- Yes, if you say that’s the time that’s there, yes.
It’s also on his Optus account?-- Yes, then that was the time.
Do you recall that conversation?-- Well, yes, Milne Jurisich rang up, I presume straight after the conversation which I have had with Joachim at 10.08, 10.09, and then Milne’s immediately rang me thereafter. What time was it did you say there?
10.17?-- 10.17. So a few minutes later he rang up and said words to the effect - I can’t recall exactly the conversation but it was a very short one and a half minute conversation regarding the - where the money had to go. Joachim, apparently he had stuffed up with the deposit, which I don’t know about that, but he told me there was a stuff-up with the deposit because to get clear funds he had to do it a different way and I said, ‘Well, if it’s not clear funds in my account, I won’t be doing the transaction.’ We had a little bit of small talk about how he had driven to - I don’t know whether he said Melbourne or-----
Myrtleford?-- Myrtleford or wherever. I know that he did ask me what the security lot was like on the property, the relevant property. I told him a little bit about it. I can’t recall exactly the specifics but I know we did talk about that.
Did you at any stage during this conversation indicate that you wanted to borrow any money from Qikloan?-- No, no.
Did you indicate that you wanted to or would be prepared to pay interest at 7 per cent?-- No.
Interest at 7 per cent cumulative?-- No.”
- In my view, the telephone records, which show a series of short phone calls between Pydde and Jurisich between 8.30 am and 10.03 am, are more indicative of Pydde trying to contact Jurisich to sort out where funds were to be sent rather than the negotiation of a substantial loan of $100,000 between Baxter and Jurisich. Furthermore, it is clear that on 3 January Jurisich and Baxter spoke for less than two minutes. On Jurisich’s version, however, it was during this short phone call that the details of the loan amount, the term of the loan and the interest rate were negotiated and the bank account details were all obtained. I do not find this to be plausible.
Mr Jurisich’s letter of 19 January 2006
- Jurisich also places reliance on a letter he states he forwarded after the conversation confirming the arrangements. He states that on 19 January 2006 he sent a letter to Baxter on the Qikloan letterhead in the following terms:
Re: $100,000 Loan @ 7% Per Month
Pursuant to our phone conversation of Tuesday 3 January 2006 with particular reference to the above matter. Joachim Pydde has confirmed to me that you have received the $100,000 which I transferred to your ANZ bank account on 3 January, immediately after we spoke on the phone. I confirm the following terms as agreed.
Term:The term of the loan, to be for a period of one Month, the extreme, to be no longer than a maximum of three months.
Interest:Interest has been agreed at a rate of seven percent (7%) Per Month and payable monthly in advance.”
(signed by Milne Jurisich)
PS. Could you also please confirm receipt of the 100 K as it has not yet come through on my bank statement.”
- Baxter denies ever receiving this letter, which on Jurisich’s evidence was given to Pydde to hand deliver on that day. Pydde denies that this letter was ever handed to him to give to Baxter, stating that all communication between Jurisich and Baxter was usually by email.
- I accept that Mr Baxter never received this letter. I consider it unusual that given the contents of that letter there was then no correspondence between Jurisich and Baxter actually demanding payment until a year later, when a letter of demand was sent on 19 January 2007. This letter demanded payment of the loan amount of $100,000, together with interest. Significantly, on 30 March 2007 solicitors acting for Jurisich wrote a letter of demand to Baxter, without mentioning this letter of 19 January 2006.
Mr Baxter’s version of events
- Baxter states that the arrangement was completely different to that alleged by Jurisich. He denies any such conversation or arrangement with Jurisich on 3 January 2006. Baxter says Suarez needed $485,000 to settle his purchase of a property at Zillmere for $695,000. Baxter states that on 30 December 2005 he agreed to lend Suarez an amount of $400,000 and that Pydde, who he knew to have acted for Qikloan previously, agreed to provide additional funds of $100,000 to enable Suarez to settle a contract on 4 January 2006. He understood these funds were coming from Qikloan.
- Baxter states that the background to the transaction was that he was initially contacted by Pydde about the loan to Suarez on 29 December 2005. Baxter stated that he initially told Pydde he was not interested because, as it was the Christmas period, it would be difficult to get things organised and he really did not want to be involved. However, he ultimately indicated to Pydde that he would have a look at the property and ascertain whether he would be involved in the loan. Baxter says that when Pydde rang him on 29 December he arranged to meet him early the following morning at the Coomera Service Station and to then head off together to look at the property at Zillmere.
- Baxter’s phone records confirm the phone calls with Pydde on 29 and 30December, including a call from Coomera. It would also seem clear that those records support a conclusion that by 7.30 am on 30 December Pydde was in Baxter’s car on route to Brisbane.
- Baxter says that after they inspected the property at Zillmere they met Suarez, at a coffee shop on Sandgate Road. Baxter stated that he told him that he wasn’t really happy but he probably would do it, particularly if Suarez had more security. Baxter’s evidence was that:
“He then mentioned to me St Vincents Road … We drove from there and as soon as I left him, I decide to ring some agents, some real estate agents, who had that area … I rang those real estate agents and determined in my mind, based on that there was five duplexes, seeing that was available. I didn’t get to see that there was a DA in place but I was fairly confident if there wasn’t, it wouldn’t have been that difficult to get one. That would have allowed five duplexes which sort of valued at similar, probably at the high end where he is paying but that’s his business.”
- Baxter stated that, having seen the properties, he told Pydde that he would not be prepared to lend the full amount of the loan, which was about $485,000, and the maximum amount he would be prepared to lend would be $400,000. Baxter’s evidence was that Pydde had said “that he had just had some funds in and he would put in the other hundred thousand”. Baxter stated:
“As far as I was concerned the only thing that I wanted to put in was 400,000 and if he wanted to put it (sic) a hundred thousand, as long as it was in second priority, I was not interested in him – if I was going to take it – the whole lot as a first mortgage, I would put all of funds in myself. I was only interested in risking 400,000. Not any more but 400,000 is all I wanted to risk as a first mortgage. If Yoachim Pydde wished to put in a hundred thousand as a second, that was fine by me.”
- When he was asked whether Joachim Pydde was putting in a hundred thousand personally or through Qikloan, Baxter replied:
“Well, knowing the situation with Milne, Joachim, Qikloan, Crystal Property Group, I knew that they were in partnership, I never actually said to him, ‘Which company on your behalf is going it (sic) put this money in?’ In my mind it was coming from Joachim, not Milne, not Qikloan, it was just coming from Joachim. From whichever company he drew it on at that time, I didn’t know for sure where it was coming from.”
- I found Baxter to be a person who gave his evidence in a thoughtful and considered way. As paragraph  indicates, he recounted his evidence in a purely factual way without undue elaboration. His version of events is also supported by the telephone records. His evidence is also substantially corroborated by his diary note on 30 December 2005.
The diary evidence
- Baxter’s diary, which is in evidence, indicates that he diarised the meeting with Suarez on 30 December 2005 with the words, “settlement on loan 4/1/06”. The entry on that date also notes that “$485,000” was needed and that the purchase price was “$695,000”. A further notation on that page states, “Wockner to draw mortgage only showing me Yok’s 100K is 2nd priority to my $400K. Yok will tell Milne to put 100K in.” It is clear that the reference to “Yok” is a reference to Pydde.
- Baxter states that he then drove back to the Gold Coast and that Pydde organised Wockner Lawyers to prepare documentation. Baxter says that when they arrived at his home he wanted to make sure that the loan of $100,000 was going to be second in priority and he put the agreement in writing. He states that, as there was not sufficient room on the page in his diary allocated to 30 December, he wrote the following at the back of the diary:
“I Joachim Pydde agree that the $100,000 contribution to the loan for Suarez on Lovegrove St will incur the same interest rate as Babapen P/L ie 10% but will rank in 2nd priority to Babapen.”
That note is signed and dated by G Baxter and J Pydde and witnessed by a Gerard McDermott.
- Baxter’s evidence is that the document was witnessed by Gerard McDermott because he had come to his home on 30 December with a cheque for $115,000 to repay a loan. Accordingly, he asked McDermott to witness the agreement with Pydde. I note that the repayment by McDermott is diarised for 30 December and that Baxter’s bank records also indicate that the loan was repaid on that date. McDermott also gave evidence confirming these events.
- I accept that the diary is a contemporaneous note of the agreement between Baxter and Pydde.
- Baxter also gave evidence that he had no need to borrow $100,000 from Pydde or Qikloan in late December 2005 or early January 2006 as he had reserve cash funds in his bank account. Baxter’s bank records are in evidence and the clear evidence is that he had excess funds at his disposal and had no shortage of funds. Baxter’s bank manager Ken McGrath also gave evidence confirming that evidence. He also indicated that if there had in fact been a shortfall, he would have been able to approve a loan for an amount of $100,000 within 24 hours. A letter from McGrath also stated that the ANZ Bank had security of $1,680,000 against Babapen’s group lending facility of $49,000.
- I accept that Baxter was not in need of a loan of $100,000, particularly a loan at high interest rates, as he could have borrowed substantial sums in excess of that amount from his bank at a lower interest rate.
- Baxter also stated that after the diary note was signed by himself and Pydde, he went to Surfers Paradise with Pydde and saw Mr Wockner, a solicitor who Pydde had organised to draw up documentation in relation to the loan. That documentation makes no reference to the arrangement whereby $100,000 was being lent by Pydde to Suarez. Baxter said this was because, “Joachim explained at the start that there was already a loan with Mr Suarez. He didn’t want him to be aware of it and he wanted to – what did he – his words were – anyway, to reinforce his already loans out with Mr Suarez.” Baxter stated that Pydde had a view that being involved in this transaction with Suarez would somehow enhance his position in relation to his existing loan to Suarez. In terms of the security being offered, Baxter indicated that Suarez had documentation, “to show that he’d had the approval for refinancing the property and it should have only been a couple of weeks’ loan.”
The loan documentation between Babapen and Suarez
- The loan agreement between Babapen and Suarez is in evidence. This document was prepared by Mr Wockner apparently at the request of Pydde and provides for interest at two rates, namely a higher rate of 12 per cent per month (144 per cent per annum) or a lower rate of 10 per cent per month (120 per cent per annum). The “Amount of Advance” at item 5 in the “Schedule -Loan Particulars” is $535,000 and the mortgaged property list refers to two properties, one at St Vincents Rd, Virginia and one at Zillmere. The advance date is described as 30 December 2005. The due date for the repayment of the loan was 30 January 2006.
- Baxter indicated that those documents would have been signed by his solicitor on his behalf, as he did not usually sign this type of document.
- This document is curious in many respects, as it clearly shows Babapen lending an amount in excess of the amount Baxter had actually agreed to loan to Suarez. It is also clear that the interest rate of between 10 per cent and 12 per cent is in excess of the interest rate Jurisich alleges he was promised. It is also clear that Pydde had arranged the documentation but there is no mention of Qikloan, Jurisich or Pydde in this documentation or of how their funds were secured.
- It is clear that a short term loan only was contemplated and that Suarez had shown Pydde material indicating that he had finance from the Commonwealth Bank. It would also seem clear that for some misguided reason Pydde did not want Suarez to know of Qikloan’s involvement in the new agreement.
- I do not consider that the circumstances surrounding this documentation and Pydde’s role in the preparation of these documents have been fully explained. As I explain later in these reasons, Pydde’s evidence is problematic in many respects. I do not consider that he has fully set out his role in this transaction or that he has fully explained his conversations with Jurisich and Baxter. In particular, I have concerns as to what he actually represented to each party and whether his representations to each were consistent or indeed truthful.
- In paragraph 25 of his affidavit of 15 January 2009, which is an exhibit in these proceedings, he in fact states that in a conversation with Jurisich on 30 December 2005 the following exchange took place:
“25. I then phoned Jurisich from Gordon’s house on my mobile phone in Gordon’s presence and had a conversation to the following effect:
JP‘I have sourced from Gordon $400K of a $500 K loan for Suarez. We need another $100K. Because it is Suarez we can’t disclose Qikloan as the lender. Gordon is prepared to advance the money through Babapen on the basis that his $400K ranks as first priority before Qikloan’s $100K. This will have the added benefit of shoring up our position on the other loan that is in default.’
JP‘I will get you the account details.’”
- Whilst I will return to Pydde’s evidence later, it is necessary to discuss the nature of the relationship between Pydde and Jurisich.
The relationship between Jurisich and Pydde
- Jurisich states that Pydde has “never been a shareholder, director, employee, officer or agent of the Company”. He states that Pydde’s relationship with the Company was that of “an independent broker”.
- Baxter’s evidence was that he understood that Pydde and Jurisich were partners in Qikloan and that Pydde essentially put together a lot of the deals. In particular, he knew that Jurisich and Pydde were in partnership when they purchased a property in Kingaroy from him in the name of Crystal Properties in 2004.
- The purchase is conceded by Jurisich, but his evidence is that whatever relationship he and Pydde had, he had distanced himself from him by early 2005. Jurisich agreed that Qikloan had been incorporated on 20 October 2004 with a registered office at 2190 Gold Coast Highway and a business address at Level 30, 10 Eagle Street Brisbane. Jurisich also agreed that that business address was an address which Pydde had been using for some time whilst running a business called “Settlement Finance Australia”, which was one of Pydde’s “various money lending enterprises”.
- Pydde produced business cards at the hearing which showed his name on a card as a representative of Settlement Finance Australia. He also produced evidence which showed Jurisich’s name on a business card for Settlement Finance Australia which also indicated that it was a “Division of Qikloan Pty Limited”. Jurisich acknowledged that he has seen the business cards. He also acknowledges that the lease at 10 Eagle Street was not terminated until “some time in 2007 or 8”. Jurisich argues, however, that he did not actually use those premises.
- There is clear evidence that numerous emails and faxes for Pydde were sent to Jurisich at Qikloan throughout 2006 and that he forwarded them on to Pydde. Jurisich claims that this was done without his consent and that Pydde simply used him as a post box. This was a practice, he says, which he continually objected to.
- Having considered the extent of the emails, I cannot accept Jurisich’s evidence that he was simply a post box. A large number of emails in the 2006 period are in evidence and I can see no indication that Jurisich objected to this practice, as they were essentially forwarded on without comment.
- The telephone records in evidence also indicate that in the period 28 December 2005 to 7 January 2006 there were 19 mobile phone calls from Jurisich to Pydde. Jurisich also indicated that he was not surprised that an analysis of his phone records to Pydde from September 2005 to 30 April 2006 revealed that in some weeks “80 per cent of your calls are to Pydde ... Some weeks 60 per cent ... Some weeks almost a hundred per cent?”
- There is further evidence that when Jurisich was considering leasing offices at the Huntington Building at the Gold Coast, the draft lease to Qikloan was sent to Pydde on 17 March 2006. The email was addressed to him with the subject heading “Qikloans” and the message “Draft office lease”. Whilst Jurisich points out, that the lease was never executed and that two rental payments only totalling $3,000 were paid in February and March 2006 in lieu of a bond, I consider the email is evidence of the nature of Pydde’s relationship with Qikloan in early 2006.
- Jurisich contends that whilst they were close in mid 2004, this ended in late 2004 or early 2005 when he knew that Pydde was in trouble with the Tax Department. It would seem clear that on 4 March 2005, the ATO instructed Qikloan not to pay any money to Pydde. Clearly the Notice under ss 260-5 of Schedule 1 of the Taxation Administration Act 1953 (Cth) was given on the basis that Qikloan owed certain monies to Pydde, which was based on the clear inference that there was a business relationship between the two, at least at that time.
- The crucial question, however, is whether there was a continuing business relationship between the two in late 2005 and early 2006. In my view, the evidence of the emails and the phone calls, as well as the negotiations in relation to the lease, indicates a continuing business relationship. Jurisich’s own evidence was that Pydde rang him in relation to this alleged loan to Baxter in late 2005. This, in itself, confirms that Pydde was brokering deals involving Jurisich at that time. Clearly, Jurisich was still having business dealings with Pydde in early 2006.
- What was the true nature of this relationship? Baxter contends that he always considered that Pydde was Jurisich’s partner and Pydde’s evidence is that he was acting for Qikloan in the transaction and that there was, in effect, a composite loan by Qikloan and Baxter to Suarez.
- In considering the nature of the relationship, it is necessary to examine the evidence of Pydde, as well as that of Lindsay Schneider, who also operated as a finance broker at the relevant time.
The evidence of Pydde, Suarez and Schneider
- At the outset, I consider that I should make it clear that I do not accept Pydde to be a witness of credit. It is clear that he has given a previous version of events to investigators when his tax affairs were being investigated in early 2004. At that time, Pydde claimed there was no partnership with Jurisich and that they were not involved in business together. That is not his evidence now. Accordingly, I do not accept Pydde’s version of events except to the extent that it is verified or substantiated by other evidence. There is, however, a larger body of evidence which substantiates Pydde’s evidence now. Significantly, Baxter’s evidence supports Pydde’s version of events. At no point, says Pydde, did he ever hear Baxter ask Jurisich to lend him $100,000, as alleged.
- Pydde gave evidence that whilst he had initially been involved in the car repair business about 10 or 12 years ago, he got into the business of finance brokering. He stated that in 2004 he had a finance brokerage business called “Settlement Finance Australia”. He stated that in October or November of 2004, when his health was not good, he approached Jurisich, who was a director of a company he was involved with, “to start Qikloan as a finance brokerage where Milne would be involved in with me”. Pydde agreed that a company search of Qikloan indicates that Jurisich is the sole director and Pydde states, however, that this was because “Well, I wasn't wanting to put my name on anything at that point in time because of my credibility and my credit rating and I was crook at the time.”
- Pydde indicated that he had all the contacts in the finance business and Jurisich had no experience in that type of business in 2004. He said that Qikloan went ahead and operated out of premises at Brisbane Street on the Gold Coast, as well as Eagle Street, Brisbane and an office in Sydney. Pydde also states there was an express agreement between himself and Jurisich that in matters involving Qikloan, he had full authority to bind the company.
- In relation to the operation of Qikloan, Pydde’s evidence was as follows:
“What part did you play in the business?-- Arranging and processing loan applications and clients.
Can you recall any agreement between yourself and Mr Jurisich as to who was to do what and more particularly as to the authority of each of you, to bind the company to loan transactions?-- I basically did all the paperwork and approved everything and forwarded it on to lawyers to continue the mortgage documents.
Did you do all the approvals?-- Yes, I did.
Was that with Mr Jurisich’s consent?-- I just did everything. It was with everyone’s consent.
Did he ever try to stop you from running the business in this way?-- No.
How long did these arrangements continue?-- A number of years.
You ultimately had a falling-out with him?-- Yes.
When was that?-- In the early part of ‘09.”
- Pydde also confirmed that he knew Baxter and that Baxter “was a lender in a number of loans that I transacted”. He stated that Baxter and Jurisich had met when he and Jurisich had purchased a property from Baxter at Kingaroy. He and Jurisich were partners in a company called Crystal Property Group that had purchased the property.
- Pydde stated that the emails in evidence which had been sent to him at Qikloan were forwarded on to him by Jurisich as he was the one who “did the processing of all the loans”. He stated if there was “a deal to be done out of the information that came through” he would “source the funds and do the deal”. Pydde’s evidence of his role in the organisation is supported by Schneider’s evidence. Schneider stated that Jurisich and Pydde operated in business together and that Jurisich was involved in the “administration” and that “Mr Pydde seemed to run the operation from doing the deals”. He stated that it was Pydde who approved the loans in relation to documentation provided by Jurisich. Jurisich questions Schneider’s credit on the basis that he is being questioned in relation to a fraud in New South Wales by New South Wales Police.
- Pydde stated that most of those loans were in fact successfully repaid, including previous loans to Suarez. Suarez has successfully repaid all but one loan which was in fact still outstanding in late 2005.
- Pydde says that just before Christmas Suarez rang him up looking for a loan and forwarded him the details. Pydde said he approached one of his usual lenders, Asset Loan Company, but as they were closing for Christmas he then approached Baxter. He told Baxter that the property over which the loan was sought was in a good area where there were unit developments. Baxter agreed to look at the property the next day. Pydde also stated that he also knew that Suarez had an “unconditional letter of approval ... That usually takes effect normally within about 21 days but because of Christmas it may take a bit longer”.
- Pydde confirmed the evidence which Baxter gave to the effect that he and Baxter inspected the property together on 30 December and that they had spoken to Suarez afterwards. He also confirmed that Baxter had made a number of calls to agents in the area to check the price.
- Pydde’s oral evidence was as follows:
“Gordon rang a number of the agents that were from the area and also the developer that was next-door and the one up the road.
Yes?-- Because the signs were all over the place there.
Yes. Did you hear there was some sort of feedback about the value of the property?-- Yes.
Was it discussed with Mr Baxter?-- Yes.
Ultimately did he announce he was prepared to make a loan?-- The values came back in the vicinity of 500 to 550,000 so Gordon said he would advance 400 and then I would top it up and I offered to top it up.
Why would you offer to top it up?-- Because it had such a secure takeout letter.
You relied upon this Commonwealth Bank letter, did you?-- Yes.
Were there any other reasons why you would do that?-- Well, the property was worth the money.
Okay. Well, was there any discussion about, say, a priority as between the two loans?-- Yes.
What was that discussion?-- Because we had existing business with Suarez, I said, Gordon, we have to do this together with a first mortgage as jointly with a Qikloan mortgage of the 100,000 that we supplied on with the 400,000 that Gordon supplied as a first mortgage so that Suarez wouldn’t know that Qikloan was involved.
Yes. But as between yourself and Qikloan - sorry, Mr Baxter, was there any arrangement?-- The arrangement was that he would be first and we would be second but on a conjoint first mortgage.”
- Pydde states that on the way back to the Gold Coast on 30 December 2005 he made a call to Jurisich and said that “we have a good security property with Suarez and it’s worth a lot more than what he is borrowing and that there was a real secure takeout from the Commonwealth Bank.” He also told Jurisich:
“--that we would be in a more secure situation because the loan that was outstanding, there was actually no loan document signed at that stage and we were still outstanding, I think, about 40 something thousand dollars and there was plenty of equity in this to be recouping that real easily with the take out that was supplied.”
- Jurisich, however, denies he would have agreed to lend money further money to Suarez as he was already derelict in relation to his existing loan to Qikloan.
- Lorenzo Suarez gave evidence and confirmed that he borrowed various amounts of money through the agency of Pydde over a number of years. He confirmed that he had an outstanding loan of $90,000 when he applied for a further loan in December 2005 in relation to the purchase of a property at Zillmere. He agreed that he had written in principle approval from the Commonwealth Bank for an interest only loan of $588,000 at 5.99 per cent per annum for at least a year and had relied on that document to get a bridging loan. Suarez also confirmed the meeting with Pydde and Baxter on 30 December 2005 and the discussion in relation to additional security. He also stated that Pydde had told him that Qikloan was putting in the additional $100, 000. In his evidence, Suarez confirmed that he had been involved in the “loan industry” previously and had been gaoled for fraud.
- Suarez also stated that in February 2006 he was contacted directly by Jurisich as follows:
“I was contacted by phone by Mr Jurisich himself and he asked - he said to me if I could meet with him to discuss his involvement with regards to this particular loan and the moneys that were outstanding. At that stage I agreed to meet with him, which was at - we met at the coffee shop downstairs at Post Office Square where he informed me that he had contributed what was already known to be I think between 100 and $105,000 approximately to the property here at Zillmere.
Yes?-- He then informed me that the six weeks had expired and when was he going to get his money because he wanted me to pay that money directly to him because he was under the impression Mr Baxter wasn’t going to pay him any money.
I see?-- He then said to me that his partner Joachim had done the loan on the premise that he was to give the money back to him within a six week period and that six weeks was now up.
What were you able to offer or promise or say in response?-- I said to him that I was trying to refinance at that time. I was trying to get the property revalued with a DA at least so that I could get the money off the bank as a development site as such. He then offered me a phone number to a solicitors mob down the coast that he thought I may have been able to contact to refinance the loan.”
- Pydde states that he and Baxter returned to the Gold Coast and organised a lawyer to do the documentation. He also stated that he signed the agreement in the back of Baxter’s diary and that he was signing the agreement on behalf of Qikloan and that the document was witnessed by McDermott.
- Pydde agreed that the mortgage documents which were drawn did not specifically acknowledge the involvement of Qikloan because “we didn’t want Suarez at this stage to know that Qikloan had been an input of money into it ... I did that after the - after he showed me the signed mortgage docs of the Commonwealth Bank Loan”.
- Furthermore, it is clear from the evidence that Pydde knew that Qikloan had sufficient funds to make the loan. Pydde stated he “... picked up a cheque with Milne the day before for another settlement of mine ...” Pydde indicated that the amount of that cheque was “Approximately a hundred and 80 something thousand”. He stated that it was his intention to use those monies to loan to Suarez.
- Pydde also stated that on 3 January 2006, Baxter called him and said there’s no money in the account from Qikloan. Pydde told Baxter, “I’ll call Milne and find out and I’ll call you back.”
- Ultimately, I accept Pydde’s version of events because it is supported by the telephone records, the diary note and McDermott’s evidence. Significantly, it is also supported by Baxter’s version of events, who I consider was a forthright witness. I have no reason to doubt he was a witness of credit. Whilst Pydde’s evidence is also supported by the evidence of Schneider and Suarez, I consider that given concerns as to their credit as raised by Jurisich, I should only rely on their evidence if it is substantiated by other evidence.
- In my view, I consider that there is sufficient evidence to indicate an ongoing and close business and personal relationship between Jurisich and Pydde at the time the sum of $100,000 was forwarded to Baxter on 3 January 2006. In particular, the evidence of Pydde and Schneider is supported by the evidence of the emails, the draft lease, the telephone records and the evidence of Baxter.
- In my view, the significance of this evidence is that it is more probable than not that the arrangements in relation to the negotiation of a loan of $100,000 were negotiated by Pydde with Baxter and not between Baxter and Jurisich, as alleged by Jurisich.
- At the hearing, Jurisich raised issues as to the credit of Pydde, Schneider and Suarez, which I have already referred to. Jurisich, however, also tried to rely on a number of matters which I considered to be irrelevant to the determination as to whether there was an agreement between Baxter and Jurisich, as alleged. Jurisich asserted a close relationship between Pydde and Baxter because Pydde rented his home from Baxter. Whilst this was confirmed by Pydde, I do not consider that that fact is relevant to the issue of whether I accept that the conversation as alleged occurred. Furthermore, Jurisich endeavoured to allege that the property at Zillmere was bought and sold within days at inflated prices because there was a settlement in conjunction organised for 4 January 2006. There was no evidence produced, however, in relation to the actual dates of the respective contracts, as opposed to the date of settlement, to support such an allegation. Jurisich also alleged that he had been subject to threats. Once again, I do not consider that this is relevant to the question as to whether there was a loan agreement between Baxter and Jurisich. There is no doubt that Pydde, Schneider and Suarez should have their evidence scrutinised as they all have backgrounds which have raised issues in relation to their credit. As I have indicated, I have accepted their evidence only to the extent that it has been substantiated in some way.
- The defendant has pleaded that Pydde was in fact Jurisich’s agent and relies on an express agreement between Pydde and Jurisich that in matters involving Qikloan, he had full authority to bind Qikloan. Given the concerns I have in relation to Pydde’s evidence, as well as my concerns about the evidence of Schneider and Suarez, I do not consider that there is sufficient corroborative evidence to determine this question.
- The defendant has also argued that when Baxter through Babapen was lending the money to Suarez, he was lending $400,000 on behalf of Babapen, but was lending the $100,000 as an undisclosed agent for Qikloan.
- Once again, I do not consider that there is sufficient corroborative evidence to be satisfied about this issue of agency. Given the current state of the evidence and the significant concerns I have about the credit of a number of the witnesses, I am not in a position to make findings on many aspects of the evidence.
- I consider, however, that the evidence supports the following findings:
- Pydde rang Baxter in relation to organising a short term loan of $500,000 to Suarez at high interest rates, on 29 December 2005;
- Pydde and Baxter visited the security property on 30 December 2005;
- Baxter agreed to loan a maximum of $400,000 to Suarez on 30 December 2005;
- Qikloan had funds of at least $180,000 in December 2005 as a result of a settlement Pydde had been involved with;
- On 30 December Pydde rang Jurisich and organised for Qikloan to put in $100,000 to the deal in order to secure an outstanding loan to Suarez;
- The Qikloan funds were to be forwarded to Babapen’s account for the purposes of drawing cheques for settlement;
- Pydde had sighted a document which had indicated Commonwealth Bank approval of loan funds to Suarez and this approval was known to Jurisich and Baxter;
- There was a written agreement as between Baxter and Pydde that Pydde’s loan ranked second in priority. This agreement was signed and witnessed by McDermott on 30 December 2005;
- $100,000 was forwarded by Jurisich on 3 Jan 2006 after a phone call from Pydde indicating that the Qikloan funds had not come into Baxter’s bank account as arranged;
- Baxter and Pydde were not together mid morning on 3 January 2006.
- Accordingly, on the basis of those findings and the other evidence that I have accepted, it is clear that I accept Baxter’s version of events. Significantly, I accept that Baxter’s version of events is substantiated and is inherently probable.
- I consider that there is simply insufficient evidence to support Jurisich’s version of events. Whilst it is clear that Jurisich sent the money to Baxter’s bank account on 3 January 2006, I can find no evidence that Baxter asked Jurisich for a loan of $100,000, other than Jurisich’s own evidence. Put simply, Jurisich’s version of events is not sufficiently substantiated to accept it, given the other evidence which I do accept and which I have set out above.
- I consider that Jurisich has failed to prove the agreement as alleged and his claim must therefore fail.
- The plaintiff’s claim is dismissed. I will hear submissions as to costs.
 Transcript day 1, p 11, ll 14-15.
 Transcript day 1, p 11, ll 12-48.
 Transcript day 1, p 12, l 13.
 Transcript day 1, p 12, ll 10-20.
 Exhibits 1, 2 ,3 & 4.
 Exhibits 12 ,23 & 27.
 Exhibit 12.
 Transcript day 2, p 81 , ll 1-15.
 Exhibit 5.
 Exhibit 23.
 Transcript day 2, pp 66-67, ll 28-3.
 Transcript day 2, pp 67, ll 22-30.
 Transcript day 2, p 67, ll 38-45.
 Exhibit 19.
 Exhibit 18.
 Transcript day 2, p 73, ll 9-13.
 Exhibit 13.
 In the document the higher and lower rates are incorrectly transposed.
 Exhibit 28.
 Final Address of M Jurisich 4 February 2010.
 Transcript day 1, p 31, ll 50-60.
 Exhibit 9.
 Transcript day 1, p 36, ll 54-56.
 Exhibit 12.
 Exhibit 10.
 Exhibit 16.
 Transcript day 3, p 32, ll 15-16.
 Transcript day 3, p 32, ll 31-33.
 Transcript day 3, p 33, ll 46-47.
 Transcript day 3, p 35, ll 20-26.
 Transcript day 3, p 82, ll 12-13.
 Transcript day 3, p 39, ll 25-55.
 Transcript day 3, p 40, ll 5-9.
 Transcript day 3, p 43, ll 35-39.
- Published Case Name:
Qikloan Pty Ltd v Babapen Pty Ltd
- Shortened Case Name:
Qikloan Pty Ltd v Babapen Pty Ltd
 QSC 44
A Lyons J
24 Mar 2010
No Litigation History